{"status":"ok","message-type":"work","message-version":"1.0.0","message":{"indexed":{"date-parts":[[2026,3,31]],"date-time":"2026-03-31T10:11:26Z","timestamp":1774951886004,"version":"3.50.1"},"reference-count":7,"publisher":"Institute for Operations Research and the Management Sciences (INFORMS)","issue":"12","content-domain":{"domain":[],"crossmark-restriction":false},"short-container-title":["Management Science"],"published-print":{"date-parts":[[2022,12]]},"abstract":"<jats:p> Blockchain technology offers firms a novel method of raising capital via so-called initial coin offerings (ICOs). In the most common form of an ICO, a firm creates digital assets called \u201cutility tokens\u201d that are tracked on a blockchain-based ledger, requires that its product be purchased only with those tokens, and then, raises capital by selling these tokens to investors prior to creating any saleable product. (Some nonfungible tokens (NFTs) may function in a similar fashion.) We model a fundamental paradox with the use of ICOs involving utility tokens and similar structures. To increase capital raised by an ICO, the firm may attempt to reduce blockchain operating costs, thus expanding the quantity of goods sold. However, because of the mechanics of miner compensation, doing so increases the number of utility token transactions that take place in any time interval (i.e., increases token velocity and thus, the effective supply of tokens). By Fisher\u2019s equation, this lowers the dollar value of tokens and the amount investors are willing to pay for them. We show that this paradox limits the value of utility token ICOs as an alternative to traditional financing options. We discuss alternatives to and variations of utility tokens that can mitigate the conundrum and promote ICOs as a more viable form of financing. <\/jats:p><jats:p> This paper was accepted by Joshua Gans, business strategy. <\/jats:p>","DOI":"10.1287\/mnsc.2022.4314","type":"journal-article","created":{"date-parts":[[2022,3,1]],"date-time":"2022-03-01T18:51:20Z","timestamp":1646160680000},"page":"9026-9041","source":"Crossref","is-referenced-by-count":21,"title":["An Examination of Velocity and Initial Coin Offerings"],"prefix":"10.1287","volume":"68","author":[{"ORCID":"https:\/\/orcid.org\/0000-0003-2293-6355","authenticated-orcid":false,"given":"Richard","family":"Holden","sequence":"first","affiliation":[{"name":"Economics, University of New South Wales Business School, Sydney, New South Wales 2052, Australia"}]},{"given":"Anup","family":"Malani","sequence":"additional","affiliation":[{"name":"University of Chicago Law School, Chicago, Illinois 60637"},{"name":"National Bureau of Economic Research, Cambridge, Massachusetts 02138"}]}],"member":"109","reference":[{"key":"B11","unstructured":"Evans A (2018) On value, velocity and monetary theory: A new approach to cryptoasset valuations. Accessed February 17, 2022, https:\/\/medium.com\/blockchannel\/on-value-velocity-and-monetary-theory-a-new-approach-to-cryptoasset-valuations-32c9b22e3b6f."},{"key":"B13","volume-title":"The Purchasing Power of Money: Its Determination and Relation to Credit Interest and Crises","author":"Fisher I","year":"1912"},{"key":"B14","doi-asserted-by":"publisher","DOI":"10.1016\/j.jedc.2021.104171"},{"key":"B15","doi-asserted-by":"publisher","DOI":"10.1093\/qje\/qjs033"},{"issue":"2","key":"B16","first-page":"246","volume":"66","author":"Grossman SJ","year":"1976","journal-title":"Amer. Econom. Rev."},{"issue":"3","key":"B17","first-page":"393","volume":"70","author":"Grossman SJ","year":"1980","journal-title":"Amer. Econom. Rev."},{"key":"B18","doi-asserted-by":"publisher","DOI":"10.1093\/rfs\/hhz131"}],"container-title":["Management Science"],"original-title":[],"language":"en","link":[{"URL":"https:\/\/pubsonline.informs.org\/doi\/pdf\/10.1287\/mnsc.2022.4314","content-type":"unspecified","content-version":"vor","intended-application":"similarity-checking"}],"deposited":{"date-parts":[[2023,4,2]],"date-time":"2023-04-02T17:20:40Z","timestamp":1680456040000},"score":1,"resource":{"primary":{"URL":"https:\/\/pubsonline.informs.org\/doi\/10.1287\/mnsc.2022.4314"}},"subtitle":[],"short-title":[],"issued":{"date-parts":[[2022,12]]},"references-count":7,"journal-issue":{"issue":"12","published-print":{"date-parts":[[2022,12]]}},"alternative-id":["10.1287\/mnsc.2022.4314"],"URL":"https:\/\/doi.org\/10.1287\/mnsc.2022.4314","relation":{},"ISSN":["0025-1909","1526-5501"],"issn-type":[{"value":"0025-1909","type":"print"},{"value":"1526-5501","type":"electronic"}],"subject":[],"published":{"date-parts":[[2022,12]]}}}